Fagron N.V. — Annual Report 2010

Feb 29, 2012

Publication

Arseus NV

Waregem

Annual Report 2010

Declaration

We declare that, to the best of our knowledge, the consolidated financial statements for the year ended 31 December 2010, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and the legal and regulatory requirements applicable in Belgium, reflect a true and fair view of the equity, the financial situation and the results of the Company and the companies that are included in the consolidation scope, and that the annual report provides a true and fair view of the development and the results of the Company and of the position of the Company and the companies included in the consolidation scope, and provides a description of the main risks and uncertainties they are faced with.

In the name and on behalf of the Board of Directors,

30 March 2011

Gervan Jeveren, CEO

Jan Peeters, CFO

FINANCIAL ANNUAL REPORT 2010

CONSOLIDATED FINANCIAL STATEMENTS

	Consolidated income statement
	Consolidated balance sheet
	Consolidated statement of changes in equity
	Consolidated cash flow statement
	Report of the Board of Directors on the consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.	General information
2.	Financial reporting principles
3.	Risk Management
4.	Critical accounting estimates and judgements
5.	Segment information
6.	Turnover
7.	Other operating income
8.	Employee benefit expenses
9.	Depreciation and amortisation
10.	Other operating expenses
11.	Financial result
12.	Income tax expenses
13.	Earnings per share
14.	Intangible assets
15.	Property, plant and equipment
16.	Financial assets and other non-current assets
17.	Taxes, remuneration and social security
18.	Stock
19.	Trade and other current assets
20.	Equity
21.	Provisions
22.	Pension obligations
23.	Financial debts and financial instruments
24.	Other current payables
25.	Contingencies
26.	Related parties
27.	Business combinations
28.	Information on the Statutory Auditor, his remuneration and related services
29.	Significant events alter balance sheet date
30.	Additional notes
31.	List of the consolidated companies

STATUTORY AUDITOR'S REPORT

STATUTORY FINANCIAL STATEMENTS

	Condensed stand-alone income statement Arseus NV
	Condensed stand-alone balance sheet Arseus NV
	Appropriation of profits Arseus NV

ALPHABETICAL TERMINOLOGY LIST

Consolidated financial statements

Consolidated income Statement in €

	Note	2010	2009
Operating income		425.262	393.624
Turnover	6	424.056	391.315
Other operating income	7	1.206	2.309
Operating expenses		(389.246)	(363.082)
Trade goods		(222.210)	(205.401)
Services and other goods		(63.208)	(62.026)
Employee benefit expenses	8	(89.606)	(82.030)
Depreciation and amortisation	9	(12.672)	(11.983)
Other operating expenses	10	(1.549)	(1.641)
Operating profit		36.017	30.542
Financial income	11	477	554
Financial expenses	11	(6.437)	(7.990)
Profit before income tax		30.056	23.107
Income tax expenses	12	(7.578)	(3.468)
Profit after income tax		22.479	19.639
Attributable to:
Equity holders of the company (net profit)		22.357	19.553
Non-controlling interest		122	85
Profit for the period		22.479	19.639
Profit for the period per share (in euros)	13	0,75	0,65
Diluted profit per share (in euros)	13	0,75	0,65
Recurring net profit per share (in euros)	13	0,98	0,81
Diluted recurring net profit per share (in euros)	13	0,97	0,81

Consolidated statement profit for the period in €

	2010	2009
Profit after income tax	22.479	19.639
Currency translation adjustments
Movements for the period	2.836	(104)
Non-controlling interest	116	31
Total direct movements in equity	2.952	(73)
Profit fort the period	25.431	19.565
Totalprofit for the period attributable
to the equity holders of the company	25.193	19.449
to non-controlling interest	238	116

Consolidated balance sheet in €

	Note	2010	200
Non current assets		355.810	289.532
Intangible assets	14	284.498	229.455
Property, plant and equipment	15	48.862	38.631
Financial assets	16	818	1.228
Deferred tax assets	17	20.785	19.205
Other non current assets	16	846	1.014
Current assets		217.782	182.628
Stock	18	66.059	60.771
Trade receivables	19	86.303	70.170
Other current assets	19	14.234	17.403
Cash and cash equivalents		51.186	34.284
Total assets		573.592	472.160
Equity		208.122	196.352
Shareholder’s equity (parent)	20	216.654	202.187
Treasury shares	20	(10.816)	(7.881)
Non-controlling interest	20	2.284	2.046
Non current liabilities		225.747	157.097
Provisions	21	975	857
Pension obligations	22	3.276	3.365
Deferred tax liabilities	17	4.363	4.232
Borrowings	23	214.960	146.305
Financial instruments	23	2.172	2.339
Current liabilities		139.723	118.711
Borrowings	23	2.315	1.902
Financial instruments	23	2.758	2.974
Trade payables		80.845	67.605
Taxes, remuneration and social security	17	27.000	24.337
Other current payables	24	26.806	21.893
Total equity and liabilities		573.592	472.160

Consolidated statement of changes in equity in €

	Share capital & share premium	Other reserves	Treasury shares	Retained earnings	Total	Noncontrolling interest	Total equity
Balance at 31 December 2008	317.302	(195.917)	(8.120)	70.281	183.546	1.984	185.530
Currency translation adjustments		(104)			(104)	31	(73)
Profit for the period				19.553	19.553	85	19.639
Total recognised income for the period	317.302	(196.021)	(8.120)	89.834	202.996	2.100	205.096
Purchase of treasury shares			239		339		339
Dividends relating to 2008 result				(9.073)	(9.073)		(9.073)
Share-based payments		144			144		144
Purchase non-controlling interests						(54)	(54)
Balance at 31 December 2009	317.302	(195.876)	(7.881)	80.761	194.306	2.046	196.352
Currency translation adjustments		2.836			2.836	116	2.952
Profit for the period				22.357	22.357	122	22.479
Total recognised income for the period	317.302	(193.040)	(7.881)	103.118	219.499	2.284	221.783
Purchase of treasury shares			(2.935)		(2.935)		(2.935)
Dividends relating to 2009 result				(10.880)	(10.880)		(10.880)
Share-based payments		154			154		154
Purchase non-controlling interests
Balance at 31 December 2010	317.302	(192.887)	(10.816)	92.238	205.838	2.284	208.122

Consolidated cash flow statement in €

	2010	2009
Operating activities
Profit before income taxes	30.056	23.107
Taxes paid	(7.803)	(5.436)
Adjustments for financial items	5.960	7.436
Total adjustments for non-cash items	11.642	11.662
Total changes in working capital	2.269	2.727
Totalcash flow from operating activities	42.126	39.496
Investment activities
Capital expenditures	(19.159)	(16.322)
Investments in existing shareholdings (subsequent payments) and in new holdings	(53.486)	(15.862)
Totalcash flow from investing activities	(72.645)	(32.184)
Financing activities
Purchase of treasury shares	(3.152)
Dividends paid	(10.812)	(9.073)
New borrowings	69.443	26.031
Reimbursement of borrowings	(1.979)	(2.589)
Interest received (paid)	(6.385)	(5.922)
Totalcash flow from financing activities	47.116	8.447
Total net cash flow for the period	16.596	15.758
Cash and cash equivalents - start of the period	34.284	18.503
Gains or losses an exchange on liquid assets	306	23
Cash and cash equivalents- end of the period	51.186	34.284
Change in cash and cash equivalents	16.596	15.758

The item "adjustment for financial items" relates to interest paid and received and to other financial expenses and income not being cash flows such as revaluation of the financial instruments.

The "total adjustments for non-cash items" particularly relates to depreciation, amortisation and changes in provisions.

The item "total changes in working capital" concerns changes in the inventories, trade debtors and creditors, other receivables and debts, and all other balance sheet elements that form part of the working capital. Aforementioned changes are adjusted as appropriate for non-cash flows as presented above and conversion differentes and changes in the consolidation scope.

Report of the Board of Directors on the consolidated financial statements

1.1. Consolidated income statement

The operating income increased 8,0% from 393.624 million euros in 2009 to 425.262 million euros in 2010. The net turnover represents 99,7% of the operating income and increased 8,4% from 391.315 million euros in 2009 to 424.056 million euros in 2010. Organic growth was 2,7% in 2010. The acquisitions in 2009 combined with the acquisitions in 2010 of the Brazilian DEG and American Gallipot within the Fagron division and the Belgian Devroe Instruments within the Arseus Medical division, together form the main components of external growth in 2010.

The turnover evolved in a different pattern for each division.

The Fagron Group experienced 19,0% turnover growth in 2010 and organic growth was 7,8%. 2010 was an historic year for Fagron. Fagron was only active in Europe until the beginning of 2010. With the strategic acquisition of American Gallipot in May and the acquisition of Brazilian DEG in December, Fagron became the worldwide market leader in pharmaceutical compounding in the space of one year.

Fagron's persistently strong turnover growth is due to the continuous introduction of new concepts and products for pharmaceutical compounding in order to provide for the growing demand worldwide for tailormade medication.

Arseus Dental experienced 0,1% turnover growth in 2010 and organic growth of -0,7% as the result of lower than expected sales of equipment in Belgium and France.

Arseus Dental's technology-driven activities achieved excellent organic growth in 2010. Swiss Hader managed to continue the strong organic growth of the third quarter into the fourth quarter. The recovery in the activities related to dental laboratories also continued in the fourth quarter. French Julie-Owandy successfully introduced the I-Max Touch 3D (digital 3-dimensional dental imaging equipment) during ADF in Paris.

The dental trade fairs in Brussels and Paris went as expected and resulted in good turnover from equipment at the end of the year. In the fourth quarter Arseus Dental reinforced its leading position on the French market by the integration of two local dental equipment dealers.

Arseus Medical's turnover grew by 3,3% in 2010, of which -5,3% was organic growth. In 2010 the emphasis at Arseus Medical was on the strategic repositioning of the product range with the aim of improving profitability. Activities with a low gross margin were phased out (turnover of approximately 7.500 million euros on annual basis) and new value-adding exclusive distributions in healthcare were added to the product range.

New activities with a high gross margin, such as sterilisation, surgery, ventilation, cardiology and medication management (AMMS), and existing activities such as bandagistery and high-grade medical technology were successful in 2010.

Arseus Medical's Surgery to Sterilization (S2S) concept was formally launched in the fourth quarter after the installation of sterilisers (MMM Group) in the first Belgian hospitals. In the surgical field, implants from Medartis and instruments from Berger Surgical were introduced. With the acquisition of Devroe Instruments in December 2010, Arseus Medical strengthened its position and product range in surgery and sterilisation in the Benelux with leading A-brands such as Medicon, Geister, Ackermann and Hipp. The growth of Duo-Med was continued and strengthened by its further roll-out in the Belgian market as well as its introduction in the Dutch market.

Corilus experienced 7,9% turnover growth in 2010, which was equal to the organic growth. The continuously strong growth of Corilus confirms the success of the strategy in which the emphasis is on developing and launching client-oriented innovative IT-total solutions for medical specialists and the European roll-out of These. Corilus also experienced very strong growth in Belgium with solutions for digital imaging for dentists.

In December 2010, Corilus signed an agreement for the supply and installation of Softalmo in a hospital in Nantes (France).

The gross margin (the difference between turnover on the one hand and trade goods, raw and auxiliary materials on the other) amounts to 201.845 million euros. This represents 47,6% of the turnover. The gros. margin in 2009 was 47,5%.

The total operating expenses, defined as services and various goods, employee benefit expenses and other operating expenses minus other operating income, amounts to 153.157 million euros, increasing by 9.767 million euros compared to 2009. The cost coverage, defined as operating expenses versus gross margin, improved from 77,1% in 2009 to 75,9% in 2010.

Depreciation and amortisation increased by 5,8% from 11.983 million euros in 2009 to 12.672 million euros in 2010.

The operating profit amounts to 36.017 million euros and represents 8,5% of turnover, an improvement of 5.475 million euros compared to 2009. In 2009 the operating result was 30.542 million euros, representing 7,8% of the turnover.

The financial result amounts to -5.960 million euros against -7.436 million euros in 2009. This improvement is due to the positive revaluation of the financial derivatives in 2010 of 0.382 million euros compared to a negative revaluation of -1.351 million euros in 2009. This positive revaluation relates to the increase in the market value of the interest rate hedges that do not qualify for hedge accounting in accordance with IAS 39.

Excluding the revaluation of the financial derivatives, the financial result amounts to -6.342 million euros, an increase of 4,2% compared to 2009. This increase is due to an increase in the net financial debt, while interest rates have, on balance, decreased.

This brings profit before income tax to 30.056 million euros, an increase of 6.950 million euros compared to 2009.

The taxes amount to 7.578 million euros, of which 2.320 million euros relates to a settlement of a tax Claim within the Corilus division. In the prospectus and the 2007, 2008 and 2009 annual reports, Arseus reported that Corilus SA (a subsidiary of Arseus) had a dispute with the Belgian tax authority on the fiscal Treatment of the tax years 2003 to 2007. In early 2011, Corilus contracted a settlement of the dispute with the tax authority for a total sum of 2.320 million euros. Because Corilus had already made payments totalling 2.481 million euros, Corilus will receive 0.332 million euros, including interest, from the Belgian tax authority.

The recurrent taxes therefore amount to 5.257 million euros, or 17,5% of the profit before income taxes, against 15,0% in 2009.

Profit after income tax amounts to 22.479 million euros, an increase of 14,5% in comparison to 2009. The non-controlling interest amounts to 0.122 million euros and concerns Fagron A/S in the Czech Republic, formerly Tamda. As a result, the share of Arseus comes to 22.357 million euros.

1.2. Consolidated balance sheet

The consolidated balance sheet total increased by 21,5% from 472.160 million euros in 2009 to 573.592 million euros in 2010.

Assets

Total non-current assets amount to 355.810 million euros. This amount is 66.278 million euros higher than in 2009.

The intangible assets increased by 55.043 million euros. This increase is caused mainly by the recognition of goodwill as a result of the acquisitions of American Gallipot, Brazilian DEG and Belgian Devroe Instruments, and by the R&D activities of Corilus and Arseus Dental. Property, plant and equipment increased by 10.231 million euros, caused by, among other things, the construction of a new head office and distribution centre for Fagron Nederland and the installation of a pick robot in the central warehouse of Fagron Nederland.

Net operating capital expenditures amount to 19.159 million euros and represent 4,5% of turnover. The most important component is an investment of 7.896 million euros in a new head office and distribution centre for Fagron Nederland. The net operating capital expenditures also included investments in R&D, automation and a pick robot for Fagron Nederland. If the investment in the new head office and distribution centre for Fagron Nederland is disregarded, the operating capital expenditures decrease by 30% compared to 2009, to 2,7% of the annual turnover.

Financial assets amount to 0,818 million euros.

Deferred tax assets represent a value of 20.785 million euros. They are mainly related to tax losses carried forward which are likely to be appropriated in the Future.

The other non-current assets (0,846 million euros) are mainly security deposits.

Total current assets amount to 217.782 million euros compared to 182.628 million euros in 2009, an increase of 35.154 million euros. The most important changes were the increase in stock by 5.288 million euros or 8,7%, the increase in trade receivables by 16.133 million euros or 23,0% and the increase in cash and cash equivalents by 16.902 million euros or 49,3%.

Equity and liabilities

Total equity amounts to 208.122 million euros. This represents an increase of 11.770 million euros in comparison to 2009.

Total liabilities increased from 275.808 million euros in 2009 to 365.470 million euros in 2010. This represents an increase of 89.663 million euros.

Provisions increased by 0,118 million euros.

Pension obligations amount to 3.276 million euros, a decrease of 2,6% in comparison to 2009.

Deferred tax liabilities relate among other things to temporary differences between reporting and fiscal accounting at the local entities. These amounted to 4.363 million euros in 2010 against 4.232 million euros in 2009.

Non-current interest-bearing financial liabilities (long-term borrowings) amount to 214.960 million euros, an increase of 68.655 million against 2009. Current interest-bearing financial liabilities (short-term borrowings) amount to 2.315 million euros, an increase of 0,413 million euros against 2009.

As at 31 December 2010, net financial debt (total current and non-current interest-bearing financial liabilities plus other long-term liabilities less cash and cash equivalents) amounts to 166.089 million euros, versus 113.923 million euros at the end of 2009. This increase is due to investments, the acquisitions of Gallipot, DEG and two local dental dealers in France and the payment for the compounding pharmacy in the Netherlands at the end of 2009. At the end of 2010, the net financial debt/annualised REBITDA ratio was 2,49, fully in compliance with the covenant under the credit facility, which sets a maximum of 3,25.

Trade payables are 13.240 million euros higher (419,6%) than in 2009 at 80.845 million euros. This increase is related to the evolution of the operating working capital, defined as stocks plus trade receivables less trade payables, from 63.336 million euros in 2009 to 71.517 million euros in 2010. This therefore represents a 12,9% increase, caused by the acquisitions made by Arseus in 2010. Without the impact of the acquisitions, the working capital would have decreased in 2010. This structural improvement is primarily due to a persistent focus on strict stock control and debtor management.

Taxes, remuneration and social security amount to 27.000 million euros, an increase of 2.663 million euros in comparison to 2009.

Other current payables amount to 26.806 million euros versus 21.893 million euros in 2009. This increase was caused by the increase in subsequent payments for acquisitions.

1.3. Consolidated cash flow statement

The consolidated cash flow statement Takes as its starting point the profit before income taxes of 30.056 million euros, as reported in the consolidated income statement.

From this amount are deducted the outgoing cash flows before taxes, being 7.803 million euros. This amount includes all income taxes effectively paid during 2010.

Then the elements from operating activities not having a cash flow effect or not directly related to operating activities are reintroduced. This represents a total of 17.602 million euros. A significant portion relates to paid interest (6.385 million euros) recognized as cash flows from financing activities (see below) minus the positive revaluation of financial derivatives (0,382 million euros). In this context, depreciations and amortisations on tangible and intangible assets and changes in provisions and deferred taxes are significant non-cash elements as well.

The next step is to set off the changes in working capital in the cash flow statement (positive effect of 2.269 million euros).

Total cash flows from investment activities produced an outflow of 72.645 million euros relating to capital expenditures in the amount of 19.159 million euros and payments for existing shareholdings (subsequent payments) and in new holdings in the amount of 53.486 million euros.

Total financing activities represent an inflow of 47.116 million euros. Arseus purchased 3.152 million euros in treasury shares in 2010 and paid out 10.812 million euros in dividends. Payment of interest on loans and other financial elements such as financial discounts produced an outflow of 6.385 million euros, the new borrowings an inflow of 69.443 million euros. This is offset by repayment of borrowings in the amount of 1.979 million euros.

In the reporting period, total cash and cash equivalents increased by 16.596 million euros: from 34.284 million euros at the start of the reporting period to 51.186 million euros at the end of the reporting period. The minor difference relates to losses on exchange on liquid assets.

Notes to the consolidated financial statements

1. General information

Arseus NV (the 'Company') and its subsidiaries (together, the 'Group') constitute a multinational group of companies that supplies products, services and concepts to professionals and institutions in the healthcare sector in Europe, the United States and Brazil. The company is subdivided into Tour divisions and operates in the markets for pharmaceutical compounding for pharmacies, dental products, medical and surgical products, and medical IT-solutions. The Company is a public limited liability company, incorporated and domiciled in Belgium, with its registered office at Textielstraat 24, 8790 Waregem. The company registration number is BE 0890 535 026. The operational activities of the Arseus Group are driven by the Dutch company Arseus BV. The head office of Arseus BV is located in Rotterdam.

The shares of Arseus are listed on the regulated markets of NYSE Euronext Brussels and NYSE Euronext Amsterdam.

The Board of Directors approved the publication of these consolidated financial statements on 30 March 2011.

2. Financial reporting principles

The principal accounting policies applied in preparing these consolidated financial statements are detailed below. These policies have been consistently applied by all consolidated entities, including subsidiaries, to all years presented, unless stated otherwise.

IFRS developments

The consolidated financial statements of Arseus have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The consolidated financial statements have been prepared on the basis of the historical cost convention, with the exception of financial assets and liabilities (including derivative instruments), which are stated at fair value.

a)	New and revised standards and interpretations of existing standards applied by the Group in 2010.

The following new standards, revised standards and interpretations first apply to the reporting period of the group starting from 1 January 2010:

•	IFRS 3 (revised): 'Business combinations'. Relates to how consolidated participations are reported. The new requirements apply to business combinations with an acquisition date in the first period starting on or after 1 July 2009;
•	IAS 27 (revised): 'The consolidated financial statements and the stand-alone financial statements'. Relates to the presentation requirements in the financial statements (effective as of 1 July 2009);
•	'Improvements to the IFRS standards' (2009)

The application of the standards above did not have any noteworthy impact on the company's financial result or balance sheet position.

The following new standards, revised standards and interpretations first apply to the reporting period of the group starting from 1 January 2010, but are not relevant for the group:

•	IAS 39 (amendment): 'Financial instruments: Inclusion and valuation' concerning qualifying hedged positions (effective as of 1 July 2009);
•	IFRS 1 (amendment): 'Additional disclosures for first time adopters' (effective as of 1 January 2010);
•	IFRS 1 (amendment): 'First application of IFRS';
•	IFRS 2 (amendment): 'Share-based payment transactions settled in cash within a group of entities' (effective as of 1 January 2010);
•	IFRIC 12: 'Service provision under concession agreements' (effective as of 30 March 2009);
•	IFRIC 15: 'Agreements for the construction of real estate' (effective as of 1 January 2010);
•	IFRIC 16: 'Hedging of net investments in foreign activities' (effective as of 1 July 2009);
•	IFRIC 17: 'Payment of non-cash assets to shareholders' (effective as of 1 July 2009);
•	IFRIC 18: 'Assets, received from customers' (effective as of 31 October 2009).

b)	The following standards, amendments to existing standards and interpretations of existing standards were published by the IASB and endorsed by the EU but do not Take effect until the 2011 financial year or later, and will not be applied early by the group:

•	IFRIC 19: 'Extinguishing financial liabilities with equity instruments' (effective as of 1 July 2010);
•	IAS 24 (revised): 'Related party disclosures' (effective as of 1 January 2011);
•	IFRIC 14 (change to interpretation): 'Minimum financing requirements for defined contribution scheme' (effective as of 1 January 2011);
•	FRS 'Presentation of the financial statements', an amendment to the disclosures to financial instruments upon first-time adoption of IFRS (effective as of 1 July 2010);
•	IAS 32 (revised): 'Classification of Claim emissions' (effective as of 1 February 2010).

The introduction of the changes reported under this point b is not expected to have any significant impact on the financial reporting.

New standards, amendments to existing standards and interpretations that were published by the IASB but not yet endorsed by the EU include:

•	IFRS 9: 'Financial instruments'. This standard is the first step in the process of replacing IAS 39. (effective as of 1 January 2013)
•	IFRS 7 (amendment) 'Financial instruments: disclosures' (effective as of 1 July 2011)
•	IAS 12 (amendment): 'Taxes' in relation to deferred taxes (effective as of 1 January 2012)
•	IFRS 1 (amendment): 'First-time adoption of IFRS' after a period of severe hyperinflation and the revocation of dates of application for the first-time adopters (effective as of 1 July 2011);
•	"Improvements to the IFRS standards" (2010).

Consolidation criteria

Subsidiaries are entities where Arseus can control some financial and operational policies and in which it generally has a shareholding in excess of 50% of voting rights. Subsidiaries are fully consolidated as from the date that control is transferred to Arseus. They are deconsolidated as from the date that control by Arseus ceases. An acquisition is recognized using the purchase method. The cost price of an acquisition is defined as the fair value of the assets given, the shares issued and the liabilities assumed on the date of the exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingencies assumed in a business combination are initially set at their fair value on acquisition date. The positive balance between cost price of the acquisition and the fair value of the share of Arseus in the acquired identifiable net assets is recognized as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated while being regarded as impairment indicator of exceptional loss of value. Where required, financial reporting principles of subsidiaries have been amended to ensure consistency with the financial reporting principles adopted by Arseus.

Foreign currency translation

Items included in the financial statements of all entities of Arseus are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in euros, the functional and presentation currency of Arseus. To consolidate Arseus and each of its subsidiaries, the respective financial statements are converted as follows:

•	Assets and liabilities at the year-end rate;
•	Income statements at the average rate for the year;
•	Components of the equity at historical exchange rate.

Exchange rate differences arising from the conversion of the net investment in foreign subsidiaries at year end exchange rate are recognized as shareholders' equity elements at "cumulative currency Translation differences".

Transactions in foreign currencies

Transactions in foreign currencies are translated to the functional currency using the exchange rates on the transaction date. Profits and losses from exchange rate differences resulting from settling these transactions and from the conversion of monetary assets and liabilities into foreign currencies at exchange rates valid at year end, are recognized in the income statement.

Property, plant and equipment

Property, plant and equipment are valued at the acquisition value or the production costs plus allocated costs where appropriate. Depreciation is calculated pro rata temporis on the basis of the useful life of the asset, in accordance with the following depreciation parameters:

Buildings	25 to 60 years
Building fixtures and fittings	5 to 25 years
Computer equipment, software	2,5 to 5 years
Office equipment	2,5 to 5 years
Furniture and vehicles	2,5 to 5 years
Other tangible fixed assets	2 to 4 years

Virtually all assets are depreciated on a straight-line basis. Any residual value taken into account when calculating the depreciations are reviewed annually. Assets acquired under finance leasing arrangements are depreciated over their economic life, which may exceed the lease term if it's reasonably certain that ownership will be obtained at the end of the lease term.

Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the share of Arseus in the net identifiable assets of the acquired subsidiary on acquisition date. Goodwill on acquisitions of subsidiaries is recognized under intangible assets. Goodwill is tested for impairment at least once a year, but also when there is a triggering event. Goodwill is recognized at cost price less accumulated impairment losses. Gains and losses on the disposal of an entity include the book value in goodwill relating to the entity sold.

Brands, licences, patents and other

Intangible assets are capitalized at cost, provided this cost is not higher than the economic value and the cost price is not higher than the recoverable value. No intangible assets with an unlimited useful life were identified. The costs of brands with a definite useful life are capitalized and generally amortized on a straight-line basis over a period of 20 years.

Research and development

Research costs related to the prospect of gaining new scientific or technological knowledge and understanding are recognized as costs as at the moment they are incurred.

Development costs are defined as costs incurred for the design of new or substantially improved products and for the processes preceding commercial production or use. They are capitalized if, among other Things, the following criteria are met:

•	there is a market for selling the product;
•	the economic benefits for Arseus will increase when selling the asset developed;
•	the expenditure attributable to intangible assets can be measured reliably.

Development costs are amortized using the straight-line method over the period of their expected benefit, currently not exceeding live years. Amortization starts as from the moment that these assets are ready for use.

Software

Acquired software is capitalized at cost price and then valued at cost price less accumulated depreciations and exceptional losses of value.

Unique software developed in-house that Arseus controls and expects to generate Future economic benefits is capitalized at the cost directly related to the production. The software is depreciated over its useful life, which is currently estimated at 2,5 to 5 years.

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and in-use value. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized costs; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities, unless Arseus has an unconditional right to defer settlement of the liability for at least 12 months after balance sheet date.

Financial assets

Arseus classifies its financial assets into the following categories: loans and receivables, and financial assets available for sale. Management determines its investment classifications at initial recognition, evaluating them at each reporting date.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments, which are not quoted in an active market and that are not intended for trading. They are included in current assets, except for those maturing more than 12 months after balance sheet date. Loans and receivables are carried at amortized cost using the effective-interest method.

Available for sale financial assets

Available for sale financial assets are non-derivatives that are classified either in this category or not in any of the other categories. They are recognized at non-current assets, unless management intends to dispose of the investment within 12 months upon balance sheet date. Available for sale financial assets are initially valued at fair value except where such a fair value cannot be reliably determined, in which case they are valued at cost. Unrealised gains and losses arising from changes in the fair value are recognized in equity. When the related assets are sold or impaired, the accumulated fair value adjustments are recognized in the income statement.

Any events or change in circumstances indicating a decrease in the recoverable amount are monitored closely. Impairment losses are recognized in the income statement as and when required.

Lease contracts – Operating leases

Lease contracts in which a significant portion of the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments under operating leases are made on a straight-line basis over the life of the operating lease.

Lease contracts — Financial leases

Lease contracts regarding property, plant and equipment whereby Arseus retains virtually all risks and benefits of ownership are classified as financial leases.

Financial leases are capitalized at the inception of the lease contract at the lower of the fair value of the leased property and the present value of the minimum lease payments. Fach lease payment is

allocated between liability and financing charges, so as to achieve a constant amount on the outstanding financing balance.

The corresponding rental obligations, net of financing charges, are recognized at non current (payable alter i year) and current (payable within the year) borrowings. The interest component of the financing charges is recognized in the income statement over the lease period, so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period.

The property, plant and equipment assets acquired under financial leases are depreciated over the useful life of the asset, which may exceed the lease term if it is reasonably certain that ownership will be obtained at the end of the lease term.

Inventories

Raw materials, auxiliary materials, and trade goods are valued at the acquisition value using the FIFO method or using the net realisable value (NRV) at balance sheet date, whichever is lower. Work in progress and finished products are valued at production cost. In addition to purchasing costs of raw materials and auxiliary materials, production costs include production costs and production overhead costs directly attributable to the individual product or the individual product group.

Trade receivables

Trade receivables are initially valued at fair value. A provision for impairment loss relating to trade receivables is created when there is objective evidence that Arseus will not be able to collect all amounts due. Significant financial difficulties of the debtor, the probability of the debtor becoming insolvent or undergoing financial restructuring, and non or overdue payments are regarded as indicators for recognizing an impairment loss for the trade receivable in question.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and are valued at acquisition at fair value and recognized at cost. Adjustments to the carrying amounts are made when at balance sheet date realisation value is lower than the book value.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are recognized in the equity as a deduction, net of taxes, from the proceeds.

If a company of Arseus purchases share capital of Arseus (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the shareholders of Arseus until the shares are cancelled, reissued or disposed of. If such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and related income tax effects, is included in equity attributable to the equity holders of Arseus.

Provisions

Provisions for restructuring costs, legal Claims, risk of losses or costs potentially arising from personal securities or collateral constituted as guarantees for creditors or commitments to third parties, from obligations to buy or sell non-current assets, from the fulfilment of completed or received orders, technical guarantees associated with turnover or services already completed by Arseus, unresolved disputes, fines and penalties related to taxes, or compensation for dismissal are recognized when: Arseus has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions for restructuring costs comprise lease termination penalties and employee termination payments. Provisions are not recognized for future operating losses.

Provisions are recognized based on management's best estimate of the expenditure required to settle the present obligation at balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Derivative financial instruments

Arseus utilizes derivative financial instruments to limit risks relating to unfavourable fluctuations in interest rates. No derivatives are employed for trade purposes.

Derivative financial instruments are initially valued at cost. After initial valuation, These instruments are stated in the balance sheet at fair value

As the derivatives contracts of Arseus do not fulfil the criteria set in IAS 39 to be regarded as hedging instruments, changes in fair value of derivatives are recognized in the income statement.

Employee benefit expenses

Pension obligations

The companies of Arseus operate various pension schemes. The pension schemes are funded through payments to insurance companies, determined by periodic actuarial calculations. Arseus has both defined benefit and defined contribution plans. The liability recognized in the balance sheet in respect of defined benefit plans is the present value of the future defined benefit obligations less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service pension costs. The defined benefit obligation is calculated periodically by independent actuaries using the projected-unit-credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Actuarial gains and losses arising from empirical adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of plan assets or 10% of the defined benefit obligation are spread in the income statement over the employees' expected average remaining employment periods. For defined contribution plans, Arseus pays contributions to insurance companies. Once the contributions have been paid, Arseus ceases to have any liabilities. Contributions to defined contribution plans are recognized as costs in the income statement at the moment they are made.

Share-based payments

Arseus operates an equity-settled, warrants-based compensation plan. The total amount to be recognized as costs over the vesting period is determined by reference to the fair value of the warrants granted, excluding the impact of any non-market vesting conditions (for example, profitability and turnover growth targets). Non market vesting conditions are included in the assumptions about the number of warrants expected to become exercisable. At each balance sheet date, Arseus revises its estimates of the number of warrants expected to become exercisable. Arseus recognizes any impact of the revision of original estimates in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the warrants are exercised.

Income taxes

Income taxes as recognized in the income statement include current income tax and deferred taxes. Current income taxes include the expected tax liabilities on the taxable income of Arseus for the financial year, based on the applicable tax rates at balance sheet date, and any adjustments of previous years. Deferred taxes are recognized using the balance sheet liability method and are calculated on the basis of the temporary differences between the carrying amount and the tax base. This method is applied to all temporary differences arising from investments in subsidiaries and associates, except for differences whereby the Timing of reversing the temporary difference is controlled by Arseus and whereby the temporary difference is not likely to be reversed in the near future. The calculation is based on the tax rates as enacted or substantially enacted at balance sheet date and expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Under this calculation method, Arseus is also required to account for deferred taxes relating to any difference between the fair value of the net acquired assets and their fiscal book value resulting from any acquisitions. Deferred tax assets are recognized in so far as the tax losses carried forward are likely to be utilized in the foreseeable future. Deferred income tax receivables are fully written down when it ceases to be likely that the corresponding tax benefit will be realized.

Revenue recognition

Turnover of goods are recognized as at the moment that delivery of the products has been made to the customer, that the customer has accepted the products, and that the related receivables are likely to be collected. Turnover of services are recognized in the accounting period in which the services have been provided. The turnover of software suites from stock are recognized as revenue at the time of delivery. The revenues relating to software service contracts are recognized over the term of the contract.

Segment reporting

An operating segment is a group of assets and activities engaged in providing products or services that are the basis of the internal reporting to the Executive Committee.

Dividend distribution

Dividend distribution to the shareholders of Arseus is recognized as a liability in the financial statements of Arseus in the period in which the dividends are approved by the shareholders of Arseus.

3. Risk Management

Risk management is extremely important to Arseus in order to secure the long-term business objectives and the value creation of the company. The policy of Arseus is to focus on identifying all major risks, on developing plans to prevent and manage these risks, and on putting in place measures to contain the consequences should such risks effectively occur. Still, Arseus cannot conclusively guarantee that said risks will not occur or that there will be no consequences when they occur. Investing in the shares of Arseus therefore entails specific risks that potential investors should take into consideration, including but not limited to the following risks, which are listed in no particular order:

Strategic risk related to market and growth

The strategic risk related to market and growth is that Arseus may face unfavourable market situations or competition that develops to Arseus' disadvantage.

Another possibility is bad strategic decisions taken by the Company. Such as: technological advances enabling the development of competitive alternative products, the possibility that success of a new product fails to materialize, ineffective configuration of the pipeline, scarcity of pharmaceutical raw materials, a drop in demand in the markets where Arseus is active as a result of new regulations and/or legislation, events affecting the purchasing patterns of key customers, or a disturbed balance between demand and supply in the markets where Arseus is active.

Arseus wants to achieve sustainable growth by consolidating its leading position in selected segments of professional healthcare by means of organic growth and to further expand this via an active buy-and-build strategy. The active acquisition policy also enables Arseus to achieve synergy benefits and improve efficiency. This is accompanied by the risk that acquired entities may not meet expectations. Arseus limits this risk as much as possible by a continuous process of international market research and by subjecting possible acquisition candidates to rigorous due diligence. After acquisition, Arseus integrates the acquired entity as quickly and as thoroughly as possible, both in strategic and organisational policies.

Risks related to regulations

The professional healthcare sector is subject to close regulatory control at both national and European level. Though Arseus has in place strictly defined operating procedures and policies to ensure compliance with the rules imposed by national and European authorities, the chance remains that risks related to applicable legislation or the regulatory framework, should they materialize, might prove to have an adverse effect on Arseus.

Adequate and reliable financial reporting is essential for both the internal management reports and the external reporting. Group-wide reporting guidelines have been drawn up within Arseus to this end, based on IFRS and internal information needs.

All entities periodically prepare business plans, budgets and interim forecasts at predetermined moments. Discussions with the management of the entities take place periodically on the general course of affairs, including the realisation and feasibility of the forecasts issued and strategic decisions.

With regard to fiscal regulation, Arseus makes use of the possibilities offered by the fiscal legislation and regulation without taking any unnecessary risks in doing so. Arseus also has the support of external fiscal advisers in this regard.

Inventory risks

As a distributor and producer, Arseus maintains inventories of (elements of) its product portfolio. Maintaining inventories however entails the risk of Full or partial non-marketability of products and the risk of price drops. The policy Arseus has initiated to optimise the supply-chain and to reduce operational working capital is expected to lead to a decrease in inventory levels.

Product liability risk

The product portfolio of the Tour divisions of Arseus comes with potential product liability risks. In its efforts to protect itself against these risks, Arseus has in place high standards of quality in terms of products and processes and continuously endeavours to assure that all business units comply with both internal and external regulations. Product liability issues, however, cannot be entirely precluded. Arseus has effected a product liability insurance within reasonable constraints.

Cyclical and seasonal nature of operating activities

Decisions to purchase investment goods (involving a large capital outlay) tend to some degree to be linked to the overall economic climate. The introduction of government healthcare refunding measures also has a potential impact on the Timing of the customer's purchase decisions. Dental equipment in particular proves to be subject to seasonal effects.

ICT related risk

To limit potential ICT related risks, Arseus uses the most recent hardware and software solutions with a proven track record. Though Arseus has taken rigorous precautions to assure the security and reliability of its IT systems, incidents may occur involving backup recovery, viruses and international network links with potentially significant implications for the operating activities of Arseus.

Financial risks

In addition to aforementioned strategic and operational risks, Arseus is also subject to various financial risks. Arseus has at its disposal ample credit facilities to sustain its day to day operations. The most important credit facility of 300 million euros has a term until 30 August 2012. At the end of 2010, the net financial debt/annualised recurring EBITDA ratio was 2,49, fully in compliance with the covenant under the credit facility which sets a maximum ratio of 3,25.

Arseus manages the cash and financing flows and the risks arising from these by means of a group-wide treasury policy. In order to optimise the financial position and keep the related interest charges to a minimum, the cash flows of the companies are centralised in a single cash Pool as much as possible.

Credit risk

Credit risk involves the risk that a debtor or other counterparty is unable to satisfy its payment obligations to Arseus, resulting in a loss for Arseus. Operating an active credit policy, Arseus has in place strict procedures to manage and limit credit risks. No individual customers make up a substantial part of either turnover or outstanding receivables. Arseus has an active policy to reduce operational working capital; from this perspective the group aims to reduce the accounts receivable balance.

Interest risk

Arseus regularly assesses the mix of financial debts with fixed and variable interest rates. At this time, financing is largely based on a syndicated loan in euros with a variable interest rate of 1 to 6 months. A higher Euribor rate by 10 base points would have adversely affected the variable interest charges in the amount of some 210 (thousand) euros. A 70 million euros financing risk due to the variable interest rate is covered by financial derivatives.

Exchange rate risk

The exchange rate risk is the risk on results due to fluctuations in the exchange rates. Arseus reports its financial results in euro and is, because of the international distribution of its activities, subject to the potential impact of currencies on its profits. Exchange rate risk is the result on the one hand of several entities of Arseus operating in a functional currency other than euros and on the other hand of the circumstance that purchasing and retail prices of Arseus have foreign currencies as reference. The risk entailed in entities of Arseus operating in a functional currency other than euros is relatively limited. This involves entities that operate in the Czech crown, the Swiss Franc, the British pound, the Danish krone, the Polish zloty, the US dollar and the Brazilian real. In 2010 these entities collectively represent less than 8% of the consolidated turnover and just over 9% of the operating result of Arseus.

Because the acquisitions in countries outside the euro zone are largely strategic in nature, the effects of fluctuations in the exchange rate will be limited in the long term.

The risk of purchasing and retail prices of Arseus having foreign currencies as reference mainly concerns the exchange rate ratios between the euros and the US dollar, and the Japanese yen and the UK pound. Exchange rate risks associated with investments in offshore participations are usually not covered.

Fair value risk

Arseus utilizes financial derivatives to cover its interest risks. Arseus covered a 70 million euros financing risk due to the variable interest rate. In accordance with IFRS, all financial derivatives are recognized either as assets or as liabilities. In accordance with IAS 39, financial derivatives are recognized at fair value. Changes in fair value are recognized by Arseus directly in the income statement because these are financial derivatives that do not qualify as cash flow hedging instrument. At the end of 2010, the cumulative revaluation of financial derivatives amounted to 4.930 million euros whereby this is treated as a non-cash item.

4. Critical accounting estimates and judgements

Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are deemed reasonable given the circumstances.

Critical assessments and judgements

Arseus makes assessments and assumptions concerning the future. The resulting estimates will, by definition, rarely match the related actual results. Those estimates and assumptions that entail a significant risk of causing the need for a material adjustment of the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimated impairment loss of goodwill and intangible assets

Arseus performs annual goodwill impairment Tests in accordance with the financial reporting principles specified in note 2. The recoverable amount of cash flow generating units is determined on the basis of value-in-use calculations. These calculations require the application of estimates. The book value of good-will as at 31 December 2010 was 251.944 million euros (2009: 199.825 million euros).

Pension obligations

The present value of the pension obligations is derived from a number of actuarially determined factors based on assumptions. The assumptions applied to determine net costs (income) for pensions include expected long-term rate of return of the relevant pension plan assets and the discount rate. Any changes in these assumptions will impact the book value of pension obligations. The gross defined benefit obligation is calculated periodically by independent actuaries. The book value of pension obligations as at 31 December 2010 was 3.276 million euros (2009: 3.365 million euros).

Provisions for disputes

As stated, provisions are valued at present value of the best estimate by management of the expenditure required to settle the existing obligation at balance sheet date. Provisions for disputes require significant professional judgement in terms of the ultimate outcome of administrative law rulings or court judgments. Estimates are always based on all available information at the moment the financial statements are prepared. However, the need for significant adjustments cannot be absolutely precluded if ruling or judgement proves not as expected. Hypotheses and assessments are continuously evaluated on the basis of empirical facts and other factors including projected development of future events regarded as reasonable given the circumstances.

5. Segment information

All activities of Arseus relate to products and services in professional healthcare and are divided into four main operational segments: Fagron, Arseus Dental, Arseus Medical, and Corilus. In accordance with IFRS 8, the operational segments were determined on the basis of the components that the Executive Committee applies to assess the performance of the operational activities and on which the decisions are based.

Arseus is organized on the basis of four main operational segments:

1.	Fagron provides products and services for pharmaceutical compounding. Fagron develops and markets its own pharmaceutical formularies, sells and distributes instruments and pharmaceutical raw materials for pharmaceutical compounding, sells and distributes compounded and cosmetic products under its own brand name, Fagron, to pharmacists, provides third-party pharmaceutical compounding services to pharmacists and hospitals, and provides specialty pharmaceutical raw materials to the pharmaceutical, nutraceutical, veterinary and cosmetic industries.
2.	Arseus Dental provides specialist products and services to dentists, labs and other dental professionals. Furthermore, Arseus Dentalproduces and assembles a complete in-house range of imaging equipment for dentists, such as x-ray units, panoramic units, intra-oral digital sensors and cameras. In Switzerland, Arseus Dental (as OEM supplier) manufactures precision components for the dental and orthopaedic industry.
3.	Arseus Medical provides innovative products, services and solutions for doctors, hospitals, retirement homes and homecare nurses. The focus lies on personal care, mobility, Organisation, hygiene & sterilisation and diagnostics.
4.	Corilus provides total IT solutions for a wide range of medical and paramedical professions, such as pharmacists, dentists, GPs, ophthalmologists, and veterinarians.

The segment results for the reporting period ending 31 December 2010 are as follows:

	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Total turnover	179.376	161.567	52.414	31.191		424.548
Inter segment turnever	(37)	(110)	(211)	(134)		(492)
Turnover	179.339	161.457	52.203	31.057		424.056
Operating result per segment	34.429	293	4.025	5.310	(8.041)	36.017
Financial result						(5.960)
Profit before income tax						30.036
Income tax expenses						(7.578)
Profit for the period						22.479

The segment results for the reporting period ending 31 December 2009 are as follows:

	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Total turnover	150.793	161.356	50.690	28.997		391.836
Inter segment turnever	(52)	(102)	(164)	(203)		(521)
Turnover	150.741	161.254	50.526	28.795		391.315
Operating result per segment	25.490	4.574	2.769	4.523	(6.813)	30.542
Financial result						(7.436)
Profit before income tax						23.107
Income tax expenses						(3.468)
Profit for the period						19.639

Other segmented items recognized in the income statement are as follows:

2010	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Depreciation and amortisation	1.949	3.298	902	3.495	2.809	12.453
Write-down on stock	(332)	(355)	79	(10)		(617)
Write-down on receivables	22	788	(95)	113	7	836

2009	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Depreciation and amortisation	2.043	3.066	682	3.151	1.942	10.885
Write-down on stock	347	37	126	2		512
Write-down im receivables	39	640	4	(97)		586

As at 31 December 2010 the assets and liabilities, and the capital expenditure (investments) for the reporting period ending on this date, are as follows:

2010	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Assets	197.800	180.743	63.375	47.498	84.176	573.592
Liabilities	62.122	57.484	21.635	8.644	215.585	363.470
Capital expenditures	1.345	1.976	1.047	4.072	10.719	19.159

As at 31 December 2009 the assets and liabilities, and the capital expenditure (investments) for the reporting period ending on this date, are as follows:

2009	Fagron	Arsens Dental	Arsens Medical	Corilus	Unallocated	Total
Total assets	133.841	166.920	60.442	45.896	65.061	472.159
Total liabilities	44.190	47.630	17.301	5.916	160.771	275.808
Capital expenditure	1.732	3.074	887	4.056	6.574	16.322

Segment assets consist primarily of property, plant and equipment, intangible assets, stock, receivables and cash from operations. They exclude deferred tax assets related to the IFRS revaluation of the investments.

Segment liabilities comprise operational liabilities out exclude such elements as corporate borrowings.

Turnover of Arseus in 2010 and 2009 by geographical segments is as follows:

	2010	2009
The Netherlands	127.779	115.263
Belgium	126.493	124.272
France	65.083	63.691
Germany	47.484	44.591
Italy	14.835	14.427
Switzerland	9.779	9.527
Spain	9.227	8.120
United States	7.148
Czech Republic	5.669	5.642
Brasil	5.473
Denmark	3.003	4.146
United Kingdom	2.040	1.636
Poland	43
Total	424.056	391.315

Arseus has a broad-based customer portfolio in which no one customer accounts for more than 10% of revenue.

6. Turnover

	2010	2009
Sale of goods	402.984	372.184
Rendering services	21.071	19.131
Turnover	424.056	391.315

7. Other operating income

	2010	2009
Gain on disposal of fixed assets	419	712
Other operating income	787	1.597
Total other operating income	1.206	2.309

8. Employee benefit expenses

	2010	2009
Wages and salaries	60.570	57.151
Social security costs	15.755	15.295
Pension costs - defined benefit plans	928	599
Pension costs - defined contribution plans	1.441	1.359
Other post-employment benefit contributions	4.607	1.296
Other employment costs	6.305	6.331
Total employee benefit expenses	89.606	82.030

Full-time equivalents (rounded at one unit)	2010	2009
Belgium	522	521
The Netherlands	395	400
France	243	249
Germany	192	193
Brasil	178
Switzerland	102	100
Czech Republic	81	75
Italy	59	56
United States	48
Spain	41	40
United Kingdom	12	7
Denmark	10	12
Poland	3	2
Total	1.887	1.655

At 31 December 2010, Arseus' workforce (fully consolidated companies) comprised 1.991 persons or 1.887,0 fulltime equivalents. Of These, 823,7 full-time equivalents are attributable to Fagron, 636,6 to Arseus Dental, 175,7 to Arseus Medical, 210,6 to Corilus and 40,4 to Arseus Corporate.

9. Depreciation and amortisation

	2010	2009
Depreciation and amortisation	12.453	10.885
Write-down an stock	(617)	512
Write-down on receivables	836	586
Depreciation and amortisation	12.672	11.983

10. Other operating expenses

	2010	2009
lncrease (decrease) in provisions for current liabilities	(181)	(80)
lncrease (decrease) in provisions for pension liabilities	(213)	218
Other operating expenses	1.943	1.503
Total other operating expenses	1.549	1.641

The item other operating expenses relates mainly to taxes and levies not being income taxes.

Non-recurring costs are not recognized as other operating expenses but are presented in their originating tost category. The total non-recurring costs included in the EBIT amount to 5.998 million euros. These costs mainly consist of restructuring costs at Arseus Dental where the workforce was reduced by 75 fulltime equivalents in 2010. Just as in 2009, an extra provision of 0,750 million euros was also created because of a conflict with a dient, stemming from 2002, concerning payment for products supplied. This case is concluded with this additional provision. In addition, the revaluation of the financial derivatives constitutes a non-recurring result of 0,382 million euros in the financial result. The total non-recurring costs alter income taxes are calculated by multiplying the sum of the non-recurring costs by the weighted average effective income tax rate and come to 6.954 million euros.

11. Financial result

	2010	2009
Financial income	477	554
Financial expenses	(1.463)	(2.978)
Interest expenses	(4.959)	(4.855)
Currency exchange differences	(14)	(157)
Financial result	(5.960)	(7.436)

The financial income largely relates to the revaluation of financial derivatives (0,382 million euros). This positive revaluation relates to the change in the market value of the interest rate hedges that are not a cash flow and do not qualify for hedge accounting in accordance with IAS 39. To value the hedging instruments, the mixed instruments were Split into their components and valued on the basis of valuation models, discounted cash flows, and Black & Scholes, as appropriate. The parameters used for These models are those valid as at year end.

The financial result, excluding the revaluation of the financial derivatives, amounts to -6.342 million euros, an increase of 4,2% compared to 2009. This increase is due to an increase in the net financial debt, while interest rates have, on balance, decreased.

The item interest-coverage concerns 70 million euros of the total financing.

12. Income tax expenses

	2010	2009
Current tax expenses	8.911	5.636
Deferred tax	(1.333)	(2.168)
Income tax expenses	7.578	3.468
Weighted average current tax rate	25,21%	15,01%
Profit before income tax	30.056	23.107
Tax calculated at weighted average statutory tax rate	9.233	6.343
Income not subject to taxes	(4.366)	(4.415)
Expenses not deductible for tax purposes	456	390
1 Tax on profit previous years	2.320	15
Other	(64)	1.135
Income tax expenses	7.578	3.468

In 2009, in the item "other" an amount of 0,6 million euros concerns taxes paid over dividend flows within Arseus.

In the prospectus and the 2007, 2008 and 2009 annual reports, Arseus reported that Corilus SA (a subsidiary of Arseus) had a dispute with the Belgian tax authority on the fiscal treatment of the tax years 2003 to 2007. In early 2011, Corilus contracted a settlement of the dispute with the tax authority for a total sum of 2.320 million euros. This amount of 2.320 million euros is included in the line 'Tax on profit previous years'.

13. Earnings per share

	2010	2009
Basic earnings per share
Profit attributable to equity holders of the Company	22.357	19.553
Weighted average number of ordinary shares	29.995	30.215
Basic earnings per share (in euro)	0,75	0,65
Diluted earnings per share
Profit attributable to equity holders of the Company	22.357	19.553
Weighted average number of ordinary shares	29.995	30.215
Effect of warrants	102
Weighted average number of ordinary shares	30.097	30.215
Diluted earnings per share (in euro)	0,75	0,65
Earnings per share before non-recurring items
Profit attributable to equity holders of the Company	22.357	19.553
Non-recurring items, after tax*	6.954	4.963
Profit before non-recurring items attributable to equity
holders of the company	29.311	24.516
Weighted average number of ordinary shares	29.995	30.215
Basic earnings per share before non-recurring items (in euro)	0,98	0,81
Profit attributable to equity holders of the Company	22.357	19.553
Non-recurring items, after tax*	6.954	4.963
Profit before non-recurring items attributable to equity
holders of the company	29.311	24.516
Weighted average number of ordinary shares	29.995	30.215
Effect of warrants	102
Weighted average number of ordinary shares	30.097	30.215
Diluted earnings per share (in euro)	0,97	0,81

* See Note 10 for definition and calculation of the non-recurring items (after tax).

14. Intangible assets

	Goodwill	Development	Concessions & patents	Brands	Software	Other	Total
Net book value as at 1 January 2009	173.785	11.289	1.718	6.186	8.049	100	201.126
Investments	18	5.812	159	28	4.218		10.235
Acquisitions	26.244	101		(2.023)	84		24.407
Disposals					(8)		(8)
Amortisation		(2.705)	(496)	(217)	(2.656)	(26)	(6.100)
Other movements		121	(23)		(84)		14
Exchange differences	(221)				2		(219)
Net book value as at 31 December 2009	199.825	14.619	1.357	3.974	9.605	74	229.455
Gross carrying amount	199.825	28.774	5.320	4.610	19.102	148	257.779
Accumulated amortisation		(14.155)	(3.962)	(636)	(9.497)	(74)	(28.324)
Net book value	199.825	14.619	1.357	3.974	9.605	74	229.455
Net book value as at 1 January 2010	199.825	14.619	1.357	3.974	9.605	74	229.455
Investments		6.707	240	77	2.604		9.629
Acquisitions	51.776			342			52.118
Disposals					(41)		(41)
Amortisation		(3.503)	(396)	(362)	(3.069)	(4)	(7.334)
Other movements		53	(4)		85		135
Exchange differences	343	179			15		538
Net book value as at 31 December 2010	251.944	18.056	1.197	4.032	9.199	70	284.498
Gross carrying amount	251.944	35.841	5.489	5.030	20.964	148	319.416
Accumulated amortisation		(17.785)	(4.292)	(998)	(11.765)	(78)	(34.918)
Net book value	251.944	18.056	1.197	4.032	9.199	70	284.498

Goodwill

Goodwill is tested at least annually for impairment and consistently when a trigger event occurs. Goodwill is recognized at tost price less accumulated impairment losses.

Goodwill impairment test

Goodwill is allocated to the cash flow generating units of Arseus, i.e. the Tour divisions of Arseus: Fagron, Arseus Dental, Arseus Medical and Corilus.

The goodwill allocation per division (in million euros) was as follows:

	2010	2009
Fagron	113,86	72,83
Arsens Dental	76,18	71,22
Arsens Medical	38,26	34,11
Corilus	23,64	21,66
Totaal	251,94	199,83

The recoverable amount of a cash flow generating unit is determined on the basis of value-in-use calculations. These calculations use cash flow projections with a five-year forecast horizon based on detailed financial budgets approved by management for the first year. The year-one budget figures are extrapolated for years two through live, taking into account an internal growth rate and a budgeted gross margin. In addition to These rates, the model uses assumptions such as the rate of perpetual growth and a pre-tax discount rate. Below are specified the key assumptions for the value-in-use calculations. Management determined gross margin and growth rates based on past performance and its market development expectations.

	Autonomous 5 year growth (%)		Perceptual Growth Rate (%)		Gross Margin (%)		Discount Rate (%)
	2010	2009	2010	2009	2010	2009	2010	2009
---	---	---	---	---	---	---	---	---
Fagron	5	5	2,5	2,5	51,48	50,91	12,81	10,6
Arsens Dental	4	4	2,0	1,5	39,68	42,33	8,74	9,66
Arsens Medical	3	3	2,5	2,5	43,12	39,53	8,54	8,86
Corilus	3	2	1,5	1,5	75,88	76,89	8,88	8,68

Above assumptions were subjected to a sensitivity analysis confirming that for 2010 no impairment of goodwill was required.

The value per cash flow generating unit as per aforementioned value-in-use calculations is compared with the net book values of the non-current assets of the relevant cash flow generating unit. For all cash flow generating units, value-in-use exceeds net book value.

15. Property, plant and equipment

	Land and buildings	Plant machinery and equipment	Furniture and vehicles	Leasing and other similar rights	Other tangible assets	Assets under construction	Total
Net book value as at 1 January 2009	10.084	3.525	3.478	4.114	10.977	2.296	34.473
Investments	2.030	1.127	1.127	34	2.510	1.433	8.261
Acquisitions	1.543	398	125	21	312		2.399
Disposals	(745)		(145)	(22)	(714)		(1.626)
Amortisation	(528)	(976)	(1.387)	(678)	(1.216)		(4.785)
Other movements	1.570	1.714	408	(745)	(689)	(2.422)	(164)
Exchange differences	41	18	2	(20)		32	73
Net book value as at 31 December 2009	13.994	5.807	3.609	2.703	22.181	1.338	38.631
Gross carrying amount	16.052	15.639	15.395	3.939	15.874	1.338	68.237
Accumulated amortisation	(2.058)	(9.833)	(11.786)	(1.237)	(4.693)		(29.606)
Net book value	13.994	5.807	3.609	2.703	22.181	1.338	38.631
Net book value as at 1 January 2020	13.994	5.807	3.609	2.703	22.181	1.338	38.631
Investments	8.099	2.021	709		1.859	194	12.882
Acquisitions	1.572	1.162	116	7	226		3.083
Disposals	(348)	(9)	(100)		(1.515)		(1.972)
Amortisation	(365)	(1.595)	(1.354)	(430)	(1.373)		(5.118)
Other movements	1.059	223	30		8	(1.388)	(66)
Exchange differences	588	356	10	458		10	1.422
Net book value as at 31 December 2020	24.599	7.965	3.019	2.738	10.387	155	48.862
Gross carrying amount	27.000	20.012	15.198	4.594	16.204	155	83.164
Accumulated amortisation	(2.401)	(12.047)	(12.179)	(1.856)	(5.817)		(34.302)
Net book value	24.599	7.965	3.019	2.738	10.387	155	48.862

* Other movements' concern mainly assets under construction that became available for use in the course of 2010.

An investment in the amount of 7.896 million euros was made in 2010 for the construction of a building for Fagron Nederland. There is a remaining contractual obligation of 1.401 million euros.

16. Financial assets and other non-current assets

	Financial assets	Other non-current assets	Total
Balance at 1 January 2009	1.061	957	2.028
Investments	140	231	371
Transfers and disposals		95	95
Reimbursements	24	(270)	(246)
Other	3	1	3
Balance at 31 December 2009	2.228	1.014	2.241
Balance at 1 January 2010	2.228	1.014	2.241
Investments	27	48	75
Transfers and disposals	7		8
Reimbursements	(409)	(218)	(627)
Other	(34)	2	(32)
Balance at 31 December 2010	818	846	1.665

An analysis of the assets mentioned above showed that none of These need to undergo an extraordinary impairment in 2010.

Other fixed assets concern receivables with different due dates. The fair value approximates the book value.

17. Taxes, remuneration and social security

	2010	2009
Current income tax liabilities	3.823	4.305
Other current tax and VAT payables	10.830	9.082
Remuneration and social security payables	12.346	10.950
Taxes, remuneration and social security	27.000	24.337

a) Deferred tax assets

	Differences in depreciation rates	Employee benefits	Provisions	Tax losses	Other	Total
Balance at 31 December 2008	21	619	208	15.530	220	16.598
Result	39		122	1.705	477	2.344
Change in the scope of consolidation			263			263
Balance at 31 December 2009	60	619	594	17.235	697	19.205
Result	150	184	(429)	330	1.085	1.320
Change in the scope of consolidation			261			261
Balance at 31 December 2010	210	803	426	17.565	1.782	20.785

b) Deferred tax liabilities

	Difference in depreciations rates	Other	Total
Balance at 31 December 2008	2.620	2.321	4.941
Result	88	(797)	(709)
Change in the scope of consolidation
Balance at 31 December 2009	2.708	1.524	4.232
Result	322	(299)
Change in the scope of consolidation	108		108
Balance at 31 December 2010	3.138	1.225	4.363

18. Stock

	2010	2009
Raw materials	13.714	7.335
Auxiliary materials	3	74
Work in progress	2.438	1.303
Finished goods	8.630	7.938
Trade goods	41.276	44.121
Stock	66.059	60.771

19. Trade and other current assets

	2010	2009
Trade receivables	88.520	72.217
Provision for impairment of receivables	(2.218)	(2.046)
Totaltrade receivables	86.303	70.170
Other receivables	14.234	17.403

There is no concentration of credit risk with respect to trade receivables as the majority of Arseus' customers are internationally dispersed. There were no indications at the end of the reporting period that debtors of trade receivables not yet due would not fulfil their payment obligations. Provisions were made for known exposures. The item other current assets mainly concerns taxes to be refunded over the reporting period and value added tax. A 750 (thousand) euros provision was made for a single debtor in the other receivables item concerning a dispute dating back to 2002. This case is concluded with this provision.

			Of which due at year-end
	Carrying amount	Of which not past-due at year end	Less than 30 days	Between 31 and 90 days	Between 91 and 150 days	More than 150 days
---	---	---	---	---	---	---
Trade receivables at 31 December 2010	86.303	58.683	14.490	7.537	1.807	3.786
Trade receivables at 31 December 2006	70.170	44.290	13.539	6.336	1.873	4.132

Cash and cash equivalents, trade receivables and other receivables usually have due dates that are close to each other. Therefore, their book value approximates the fair value.

20. Equity

Authorized capital

By resolution adopted by the Extraordinary General Meeting of 7 September 2007, the Board of Directors was granted the power to increase the capital in one or more instalments by a maximum amount of 319.810.475,00 euros by means and an terms to be decided by the Board of Directors, such within a period of live years as from publication date of said resolution in the Annexes of the Belgian Bulletin of Acts, Orders and Decrees.

As at 31 December 2010, the Board of Directors is still authorized to increase the capital by a maximum amount of 319.810.475,00 euros.

If the capital is increased within the limits of the authorized capital then the Board of Directors will be competent to request payment of a share premium.

If the Board of Directors adopts this decision then this share premium will be deposited into a blocked account the balance of which can only be reduced or transferred in whole on the basis of a resolution adopted by a General Meeting of Shareholders in accordance with the clauses governing an amendment of the articles of association.

This power of the Board of Directors will apply to capital increases that are subscribed to in cash or in kind, or that result from capitalization of reserves with or without the issue of new Shares. The Board of Directors is permitted to issue convertible bonds or warrants within the limits of the authorized capital.

Statement of changes in the capital and in the number of shares

No changes occurred in the fourth financial year of Arseus NV.

Warrant Plan of the Offer

As proposed by the Board of Directors, the Extraordinary General Meeting of Shareholders of 7 September 2007 approved the `Warrant plan of the Offer'. This plan concerned the creation of no more than 6.550.699 warrants, each entitling the holder to subscribe to one share, to be offered to existing shareholders of Omega Pharma NV who acquired Arseus NV shares. At the adoption of the realized capital increase on 9 October 2007, the exact number of warrants issued proved to be 3.650.575. These warrants were exercisable from 17 to 28 January 2011 at an exercise price of 13,88 euros. The exercise price of each warrant is equal to 140% (rounded up to the next euro quarter (0,25 euros) of the Offer Price, adjusted for exceptional dividend as provided for in the terms and conditions of the Warrant plan of the Offer.

On 16 February 2011, 1.018 new shares were issued as a result of the exercise of warrants under the Warrant Plan of the Offer. These newly issued shares are entitled to dividend from the 2011 financial year onward.

Consequently, These 1,018 newly issued shares are listed on a separate line on NYSE Euronext (ISIN code BE0380320805) until 10 May 2011. The number of voting securities of Arseus is 31.196.139.

The total number of voting rights (denominator) is 31.196.139. The authorised capital amounts to 319.820.911,43 euros.

Share-based payments

On 6 September 2007, the Board of Directors approved two warrant plans for the benefit of the employees, directors and consultants of the Company and/or subsidiaries (Warrant Plan 1 and Warrant Plan 2).

The warrants granted under Warrant Plan 1 (for employees) have a lifetime of 8 years as of the date on which they are granted.

For employees (Warrant Plan 1) the warrants are exercisable in annual instalments of 25%, in May of the fourth, fifth, sixth and seventh calendar year after the calendar year in which the Warrants are offered.

Pursuant to a decision taken by the Board of Directors dated 11 May 2009, held in the presence of the notary Mr Dirk van Haesebrouck, the period during which the warrants granted to beneficiaries prior to 31 August 2008 in the context of Warrant Plan 1 are exercisable, was extended by 5 years to 17 December 2020, in accordance with the Amendment Act (Herstelwet).

The warrants granted under Warrant Plan 2 (for directors and consultants) have a lifetime of 5 years as of the date of Issue.

For directors and consultants (Warrant Plan 2) the warrants are exercisable, pursuant to a decision of the relevant body, after granting of the warrants, (i) in annual instalments of 50% in May of the third and fourth calendar years after the calendar year in which the warrants are offered, or (ii) in annual instalments of 25% in May of any calendar year after the calendar year in which the warrants are offered. These alternatives depend on the holder's contribution paid for the warrants. This is 7,5% for (i) or 15% for (ii).

Pursuant to a decision of the Board of Directors dated 13 July 2009 it was decided, subject to the resolutive condition of any decision to the contrary taken by the General Meeting, to extend the period for exercising the rights granted to beneficiaries prior to 31 August 2008 under Warrant Plan 2 by five years to 17 December 2017, on the understanding that beneficiaries exercising their rights following the expiry of the initial period (exercising of rights after 17 December 2012) will solely be entitled to acquire existing, instead of new, shares in the Company. This extension was presented to the Board of Directors at the annual meeting on 10 May 2010. The General Meeting ratified this proposal.

The condition for vesting warrants is for employees that they still have an employment contract with the Company and for directors and consultants that their relationship with the Company has not been terminated.

The cost of the warrants is determined at the warrant's fair value on grant date and is spread over the vesting period of the warrants. The cost is recognized at the item other employee benefit expenses at an amount of 154 (thousand) euros for financial year 2010. In relation to the change to the exercise periods given above, at the moment of the change the actual value of the warrants without taking the change into account was compared to the actual value after the change. No additional costs needed to be recognised.

Movements in the number of outstanding warrants and their related weighted average exercise prices are as follows:

2010	Average exercise price in euros	Warrants
Per 1 January 2010	10,11	1.249.750
Granted	8,68	500
Forfeited	10,25	20.750
Forfeited	8,14	5.500
Exercised
Per 31 December 2010	10,11	1.224.000

No warrants under Warrant Plan i or Warrant Plan 2 were exercised in 2010.

The related weighted average exercise price per share at year-end amounted to 10,11 euros in 2010.

As of 30 March 2011, the total number of warrants not yet exercised which could prompt the issue of the same number of shares of the Company amounted to 1.224.000. Their average exercise price amounts to 10,11 euros.

Outstanding warrants at year end have the following expiry dates and exercise prices:

Expiry date	Exercise price	Warrants
2011 -May	10,25	1.006.100
2011 -May	8,14	10.000
2011 -May	6,29	5.000
2012 -May	10,25	48.300
2012 -May	8,14	17.375
2012 -May	6,29	5.000
2013 -May	10,25	48.300
2013 -May	8,14	7.375
2013 -May	7,77	3.125
2013 -May	8,11	125
2013 -May	8,68	125
2014 -May	10,25	48.300
2014 -May	8,14	7.375
2014 -May	7,77	3.125
2014 -May	8,11	125
2014 -May	8,68	125
2015 - May	8,14	7.375
2015 - May	7,77	3.125
2015 - May	8,11	125
2015 - May	8,68	125
2016 -May	7,77	3.125
2016 -May	8,11	125
2016 -May	8,68	125
Total	192,52	1.224.000

Fair value

The fair value of the warrants granted under Warrant Plan 1 and Warrant Plan 2 was determined using the 'Black & Scholes' valuation model and was 10 (thousand) euros for the warrants granted in 2010. The main inputs into the model were the share price at grant date, the above mentioned exercise price, the standard deviation of expected share price returns, the above specified option life, and the annual risk-free interest rate.

Stock option plan

On 7 December 2009, the Board of Directors approved the Arseus NV Stock Option Plan (Stock Option Plan) for employees, directors, and consultants of the Company and/or subsidiaries, which approval was subsequently ratified by the Special Shareholders' Meeting of 27 January 2010.

The options granted under the Stock Option Plan are granted free of Charge and, in line with the plan, have a term of 6 years from the date of offer. Options not exercised at the end of the six-year term, on 16 January 2016 therefore, are void by operation of law.

In accordance with the provisions of Section 43, § 4, of the Act of 26 March 1999 concerning the Belgian Action Plan for Employment 1998 (Stock Options Act), the Exercise Price shall be determined on the basis of the share's average closing price during the thirty days preceding the date of the offer of the Options, and was therefore calculated at 8.5214 euros per option. The Options shall be exercisable during the third, fourth, fifth and sixth calendar year following the calendar year in which the Options were offered, each time for 25%.

The Exercise of the Options at the Exercise Price shall take place unconditionally and may only take place in the month of April of each calendar year and may take place for the first time in April 2012 in the proportions specified below.

Exercise of maximum	Time
25 % of the Options granted	April 2012
50 % of the Options granted	April 2013
75 % of the Options granted	April 2014
100 % of the Options granted	April 2015

	Average exercise price in euros	Stock options
Per 1 January
Granted	8,52	987.500
Forfeited
Exercised
Per p. December	8,52	987.500

Dividend

A dividend of 10.879 (thousand) euros was paid in 2009, this is 0,36 euros per share. At the Annual General Meeting of 9 May 2011, a dividend for 2011 will be proposed of 0,44 euros per share, which comes to a total dividend of 13.154 (thousand) euros. This dividend due is not recognized in These financial statements.

21. Provisions

	Taxes	Disputes	Warranty obligations	Other	Total
Balance at 1 January 2009	48	104	385	273	811
Additions
Through business combinations			92	35	127
Other		75	(64)	45	57
Amounts used		4	7	(238)	(226)
Other				(1)	(1)
Transfers		(1)	90		89
Balance all January 2010	48	183	511	115	857
Additions
Through business combinations		139	41	160	341
Other		114	89	140	342
Amounts used		(313)	(172)	(39)	(523)
Other
Transfers			(22)	(20)	(42)
Balance at 31 December 2010	48	123	448	357	975

22. Pension obligations

The amounts recognized in the balance sheet are established as follows:

	2010	2009
Present value of funded obligations	13.064	12.390
Fair value of plan assets	(9441)	(8.735)
Present value of unfunded obligations	3,623	3.655
Unrecognized actuarial losses (gains)	(347)	(290)
Liability in the Balance sheet	3.276	3.365

All defined benefit plans are final salary pension plans. The amounts pertaining to post employment medical plans are included in the liability but are not significant. There are no informal constructive obligations.

The assets comprise qualifying insurance policies and are not part of the in-house financial instruments of Arseus.

The amounts recognized in the income statement are as follows:

	2010	2009
Current service cost	(118)	142
Interest cost on obligation	582	540
Return on plan assets	(340)	(396)
Net actuarial gains (losses) recognized during the year	591	531
	715	817
of which included in the movement of provisions	(213)	218
or which included in the employee benefit expenses	928	599

Movements in net liability:

	2010	2009
Net liability in the balance sheet at 1 January	3.365	3.044
Expense	715	817
Rensions paid directly from pennen
Contributions/benefits	(804)	(496)
Transfer
Net liability in the balance sheet at 31 December	3.276	3.365

In the Netherlands, Arseus has two defined benefit plans. The principal actuarial assumptions used were as follows:

•	The weighted average discount rate was 5,20% for 2010 and 5.200 for 2009;
•	The weighted expected return on plan assets was 3,82% for 2010 and 3,82% for 2009;
•	The weighted expected general salary increase was 2,50% for 2010 and 2,50% for 2009.

23. Financial debts and financial instruments

	2010	2009
Non current
Financial lease liabilities	1.264	1.332
Bank borrowings	213.697	144.941
Other borrowings		32
	214.960	146.305
Current
Financial lease liabilities	683	639
Bank borrowings	850	483
Other borrowings	782	781
	2.315	1.902
Total	217.275	148.207

	2010	2010	2010	2009	2009	2009
Non-current borrowings by term	Financial leases	Bank borrowings	Other borrowings	Financial leases	Bank borrowings	Other borrowings
---	---	---	---	---	---	---
More than 1 year but less than 5 years	1.264	211.891		1.332	142.999	32
More than 5 years		1.805			1.942
Total non-current borrowings	1.264	213.697		2.332	244.942	32

a. Bank borrowings

The book value of the bank borrowings is expressed in euro. The effective interest rate at balance sheet date on 31 December 2010 was 2,586%.

The principal source of financing of Arseus is a credit facility of 300 million euros which has a duration to 30 August 2012. As at end 2010, an amount of 210 million euros had been withdrawn. This amount is presented as a long-term bank loan. This is a loan with a variable interest rate of 1 to 6 months. The interest risk relating to 70 million euros of this loan was covered with financial derivatives. The fair value of These financial derivatives at year-end 2010 was 4.930 million euros, 2.172 million euros of which was presented as long-term liability and 2.758 million euros as short-term liability. The Full movement in fair value in 2010 was added to the result. Arseus has no other financial derivatives.

As do the borrowing companies, Arseus NV and Arseus Capital NV, the following companies serve as guarantors for the bank loan concluded by Arseus:

Company

•	ACA Pharma BVBA
•	Alphadent NV
•	Arseus NV
•	Arseus Capital NV
•	Arseus Dental Nederland BV
•	Arseus Lab BV
•	Certa NV
•	Corilus SA
•	Duo-Med NV
•	Dutch Biofarmaceutics BV
•	Fagron BV
•	Lamoral NV
•	Spruyt hillen BV

b. Financial leases

Property, plant and equipment include the following amounts where Arseus is a lessee under a financial lease.

	2010	2009
Cost - capitalized financial leases	4.594	3.939
Accumulated depreciation	(1.856)	(1.237)
Net amount of assets in Leasing	2.738	2.703

The net amount of the financial leases concerns the following investments:

	2010	2009
Buildings, installations and machinery	2.738	2.691
Furniture and vehicles		12
Net amount of assets in Leasing	2.738	2.703

Financial lease liabilities - minimum lease payments:

	2010	2009
within 1 year	731	86
Marc than 1 year but less than 5 years	1.499	1.594
Marc than 5 years
Total	2.230	2.279
Future financing charges on financial leases	284	309
Present value of financial lease liabilities	2.947	2.970

c. Operating leases

Operating lease liabilities - minimum lease payments:

	2010	2009
Within 1 year a	5.749	5.759
Marc than 1 year but less than 5 years	10.818	11.491
More than 5 years	4.932	2.667
Total	21.499	29.928

The fair values of the bank borrowings and financial leasing liabilities are calculated based on the present value of the Future payments associated with the debt.

24. Other current payables

	2010	2009
Prepayments	2.097	1.643
Other payables	21.857	18.492
Accrued expenses	2.852	1.758
Other current payables	26.806	22.893

Trade payables and other commitments generally have due dates that are close to each other. The reported values approximate the fair values.

25. Contingencies

Arseus is involved in a number of claims, disputes and legal proceedings within the normal conduct of its business. Management believes that these claims, disputes and legal proceedings will not, in the aggregate, have a materially adverse impact on the financial condition of Arseus.

Nevertheless, due to their individual significance the contingencies below require disclosure.

•

One of the subsidiaries of Arseus, Corilus SA, is subject to several claims by the Belgian tax authorities in the amounts of 0,768 million euros, 6.547 million euros, 7.809 million euros, 9.812 million euros, and 7.480 million euros, respectively, to be added to the tax Base of Corilus SA for the income years 2002, 2003, 2004, 2005, and 2006 (with an additional 10% tax penalty applied). In early 2011, Corilus contracted a settlement of the dispute with the tax authority for a total sum of 2.320 million euros. Because Corilus had already made payments totalling 2.481 million euros, Corilus will receive 0,332 million euros, including interest, from the Belgian tax authority.

On the date of these financial statements, Arseus was involved in the following material disputes, it being understood that the term 'material' shall be interpreted as referring to disputes with a financial risk exceeding 0,750 million euros:

•

One of the subsidiaries of Arseus, Fagron Iberica, has received a Claim in the amount of 12.953 million euros from Abbott GmbH & Co. KG. The court of first instance No. 37 of Barcelona ruled in favour of Fagron Iberica on 11 March 2005, out Abbott GmbH & Co KG filed an appeal, which is still pending. In 2008, the court again ruled that Fagron Iberica is not required to pay any compensation, in response to which Abbott GmbH & Co. KG appealed again. The ruling in this appeal is expected by 2011. Depending on the outcome, the matter may not settled until 2013. Arseus deems it likely that it will be indemnified for all negative consequences in this regard.

26. Related parties

The overall remuneration package for members of the Executive Committee and the CEO individually, as well as the non-executive directors, for the financial years 2009 and 2010 was as follows.

	Fixed remuneration component 1	Variable remuneration component	Other remuneration components 2
2009 financial year
Gervan Jeveren, CEO	421	215	21
Executive Committee,
including the CEO	1.023	370	41
Non-executive members of the Board of Directors	150
2010 financial year
Gervan Jeveren, CEO	424	291	16
Executive Committee,
including the CEO	1.850	591	37
Non-executive members of the Board of Directors	185

1 Costs for Arsens, i.e. the gross amount including any social security contributions.

2 lncludes costs for pensions, insurances and the cash value of the other benefits in kind.

The variable remuneration component for the 2010 fiscal year is the bonus effectively paid out in 2011.

The Remuneration Committee formulates proposals annually for the remuneration policy and/or other benefits for members of the Executive Committee and the CEO. In the event of any requests for resignation, an arrangement in line with the market will be applied.

In 2007, members of the Board of Directors who do not serve on the Executive Committee obtained 110.000 warrants. The resignation of two members in 2009 brings the total number of outstanding warrants in this context to 90.000. In the course of 2007, Mr van Jeveren obtained 500.000 warrants, while the other members of the Executive Committee obtained 300.000. The members of the Executive Committee, in the composition in effect on 31 December 2010, together hold 810.000 warrants.

In the course of 2010, Mr van Jeveren obtained 500.000 stock options, while the other members of the Executive Committee obtained 440.000.

The CEO rents out buildings to a group company for an amount of 241.000 euros. The rental arrangement stems from the time before the company was acquired by Omega Pharma, the legal predecessor to Arseus, and was supported by independent valuation reports upon its commencement. The rental arrangement was reported to Arseus's Board of Directors in 2007 upon the incorporation. The rental agreements are due to expire.

27. Business combinations

Arseus completed a number of acquisitions in the financial year 2010. As the acquired activities were immediately — in their entirety or to a significant degree — integrated in existing entities of Arseus, their respective contributions to the profit of Arseus have not been reported separately.

In the pharmaceutical products sector, American Gallipot Inc. (included in the consolidated financial statements from April 2010) was acquired in 2010. Approximately 11,8 million euros was paid for the acquisition, representing an increase in goodwill of 10.372 million euros. This goodwill was fully allocated to the Fagron operating business segment. The fair value of the acquired assets and liabilities is detailed below.

Fair value of the acquired assets and liabilities of Gallipot Inc.

Property, plant and equipment	148
Deferred tax assets	460
Inventories	1.215
Trade receivables	779
Other receivables	79
Cash	125
Total assets	2.807
Trade payables	619
Other current debts	764
Net acquired assets	1.424
Goodwill	10.372
Total acquisition amount	11.796

In the pharmaceutical products sector, Brazilian DEG (included in the consolidated financial statements from November 2010) was also acquired. Approximately 37.338 million euros was paid for the acquisition, representing an increase in goodwill of 31.473 million euros. This goodwill was fully allocated to the Fagron operating business segment. The fair value of the acquired assets and liabilities is detailed below.

Fair value of the acquired assets and liabilities of DEG Importação De Produtos Químicos Ltda

Property, plant and equipment	2.559
Deferred tax assets	18
Inventories	3.668
Trade receivables	4.282
Other receivables	71
Total assets	10.398
Trade payables	3.564
Other current debts	1.170
Net acquired assets	5.865
Goodwill	31.473
Total acquisition amount	37.338

Much of the goodwill on the acquisitions will be tax deductible and the correct amount will be determined as soon as the purchase price allocation is definitive.

In the area of surgical instruments, endoscopy services and sterilisation-handling solutions, Devroe Instruments (included in the consolidated financial statements from November 2010) was also acquired in 2010. Approximately 3,9 million euros was paid for the acquisition, representing an increase in goodwill of 4.169 million euros. This goodwill was fully allocated to the Medical operating business segment.

Several other smaller companies and activities were acquired in 2010 as well, for a total purchase price of 6.086 million euros. The total net assets acquired for allocation of the purchase price related to These smaller companies and activities amounted to 1.854 million euros. The total goodwill also increased by 0,343 million euros as the result of exchange rate differentes.

These acquisitions in 2010, together with the final determination of the fair value of the assets and liabilities acquired in 2009, increased the goodwill by 5.762 million euros.

The fair value of a number of acquired assets and liabilities has been determined provisionally.

The total represents an increase in the goodwill of 52.119 million euros, of which 41.027 million euros was allocated to the Fagron operating segment, 4.961 million euros to Arseus Dental, 4.153 million euros to Arseus Medical and 1.978 million euros to Corilus.

No material acquisitions have been made in 2011 as of the date of publication of the 2010 annual report.

28. Information on the Statutory Auditor, his remuneration and related services

The Company's Statutory Auditor is PricewaterhouseCoopers Bedrijfsrevisoren BCVBA, represented by Peter Opsomer.

	2010	2009
Audit fee for the Group audit
Arsens Group	355	365
Audit fee for PricewaterhouseCoopers Bedrijfsrevisoren	379	169
Audit fee for parties related to Pricewaterhouse Coopers bedrijfdrevisoren	176	198
Additional services rendered by the auditor to the group
Other engagements linked to the Auditor's mandate	37	30
Additional services rendered by parties related to
the Auditorto the Group
Tax advisory services	39	71
Other services	8	25

The item other engagement, other than strictly financial audit work, relates mainly to due diligence work.

29. Significant events after balance sheet date

In the first quarter of 2011, Corilus strengthened its position on the Belgian market for software for Residential Care Centres with the acquisition of the Belgian company CMS. As a result of this acquisition, Corilus can quickly respond to and profit from the consolidation trend among Residential Care Centres. An additional advantage is that Corilus can directly integrate its Infiplus software for home care nurses with CMS's GERACC software for Residential Care Centres. This enables it to respond to the important development that Residential Care Centres are increasingly cooperating with home care.

30. Additional notes

Off balance sheet rights and liabilities — collateral:

•	Hader SA has provided a mortgage registration in the amount of 1.028 million euros in the context of its financing.
•	Arseus BV has issued a guarantee in the amount of 1.395 million euros in the context of the new construction of the head office of Fagron Nederland.

Arseus NV has signed a liability statement on behalf of a number of Dutch subsidiaries. These are:

•	Arseus BV
•	Arseus Dental BV
•	Arseus Dental Nederland BV
•	Arseus Lab BV
•	Arseus Medical BV
•	Corilus BV
•	DSD BV
•	Dutch BioFarmaceutics BV
•	Fagron Brazil Holding BV
•	Fagron BV
•	Fagron Group BV
•	Fagron Services BV
•	Novux Lab BV
•	Spruyt hillen BV
•	Steunpunt Apotheek Mierlo-Hout BV
•	Timm Health Care BV
•	Twipe BV

31. List of the consolidated companies

Abacus BV BA	Landvan Rodelaan 7,9820 Schelderode (Belgium)	100%
ABC Dental and Pharmaceutical Consultancy NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
ACA Pharma BV BA	Textielstraat 24, 8790 Waregem (Belgium)	100%
All Dentaire Sarl	90 Rue du Faubourg de Béthune, 56000 Lille (France)	100%
Alphadent NV	Textielstraat 24 , 8790 Waregem (Belgium)	100%
APPEGSA	Rue de la Sambreó 6, 6032 Charleroi (Belgium)	100%
Arsens België NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
Arsens BV	Kralingseweg 207-211, 3062 CE Rotterdam (The Netherlands)	100%
Arsens Capital NV	Textielstraat 24 , 8790 Waregem (Belgium)	100%
Arsens Dental BV	Kralingseweg 207-211, 3062 CE Rotterdam (The Netherlands)	100%
Arsens Dental Nederland BV	Cartografenweg 18, 5141 MT Waalwijk (The Netherlands)	100%
Arsens Distribution SA	ZAC du Pré Catelan Rue Delesalle, 59110 La Madeleine (France)	100%
Arsens Est Sarl	Boucle de la Bergerie 5, 57070 St Julien Les Metz (France)	100%
Arsens France SAS	Boulevard Ornano 30/34, 93200 Saint-Denis (France)	100%
Arsens Hospital NV	Boomsesteenweg 524, 2610 Wilrijk (Belgium)	100%
Arsens Ile-de-France SA	Avenue Alphand 2, 75116 Paris (France)	100%
Arsens Lab BV	Leeuweriklaan 2, 3704 GR Zeist (The Netherlands)	100%
Arseus Lab NV	Textielstraat 24,8290 Waregem (Belgium)	100%
Arseus Lab SAS	27 rue des Frères Lumière, 68000 Colmar (France)	100%
Arseus Medical BV	Gelderlandhaven 4, 3433 PG Nieuwegein (The Netherlands)	100%
Arseus Medical NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
Arseus NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
Arseus Ouest SAS	Le Bordage, 33310 Cesson Sevigne (France)	100%
Arseus Tec NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
Arseus Tec SAS	Boulevard Ornano 32, 93200 Saint-Denis (France)	100%
Bruco Hospital NV	Dragonderdreef 5, 8320 Vichte (Belgium)	100%
Certa SA	Textielstraat 24, 8790 Waregem (Belgium)	100%
Corilus BV	Randhoeve 221, 3993 GA Houten (The Netherlands)	100%
Corilus Info Sante SA	Rue Gabriel Peri 30, 92700 Colombes (France)	100%
Corilus SA	Rue Camille Hubert 23, 5032 Gembloux (Belgium)	100%
Deg Importação De Produtos Químicos Ltda	Rua Jurupari, 803 - Jardim Oriental, 04348-070 São Paulo (Brazil)	100%
Devroe Instruments Bvba	Dragonderdreef 3, 8570 Vichte (Belgium)	100%
Dorge Medic SA	Chausse de Nivelles 351, 5020 Temploux (Belgium)	100%
DSD BV	Markerkant 1303, 1314 AL Almere (The Netherlands)	100%
Duo-Med NV	Berkenlaan 33, Londerzeel (Belgium)	100%
Dutch BioFarmaceutics BV	Steenovenweg 15, 5700 AJ Helmond (The Netherlands)	100%
Eurotec Dental GmbH	Forumstrasse 12, 4468 Neuss (Germany)	100%
Eurotec Dental SAS	147 rue Marin, 75019 Paris (France)	100%
Fagron a.s.	Holicka 1098/31M, 77200 Olomouc (Czech Republic)	100%
Fagron A/S	Kigkurren 8M 2. Sal, 2300 Copenhagen (Denmark)	100%
Fagron Brasil Empreendimentos E Participações Ltda	Rua Jurupari 803 - Jardim Oriental, 04348-070 São Paulo (Brazil)	100%
Fagron Brasil Holding BV	Kralingseweg 207-211, 3062 CE Rotterdam (The Netherlands)	100%
Fagron BV	Hoogeveenenweg 210, 2913 LV Nieuwerkerkkaanden Ijssel (The Netherlands)	100%
Fagron GmbH & Co KG	Von-Bronsart-Straße 12, 22885 Barsbüttel (Germany)	100%
Fagron Group BV	Kralingseweg 207-211, 3062 CE Rotterdam (The Netherlands)	100%
Fagron Holding USALLC	Orangestreet 1209, New Castle County (United States)	100%
Fagron Iberica SAU	Carrerde Josep Tapiolas 15, 8226 Terrassa (Spain)	100%
Fagron NV	Textielstraat 20, 8790 Waregem (Belgium)	100%
Fagron Poland SP.Z.o.o	Albatrosów 1, Krakow (Poland)	100%
Fagron SAS	rue Gabriel Peri 30, 92700 Colombes (France)	100%
Fagron Services BV	Molenwerf 13, 1911 DB Uitgeest (The Netherlands)	100%
Fagron Services BVBA	Industrieweg 2, 2830 Boom (Belgium)	100%
Fagron UK Ltd	Pink Ribbon Lane 1 First Floor, NE 1 DW Newcastle upon Tyne (United Kingdom)	100%
Gallipot Inc.	2400 Pilot Knobroad, 55120 St. Paul (United States)	100%
GJD SA	Ieperstraat 30, Menin 8930 (Belgium)	100%
Hader SA	Rue Jardinière 153, 2300 La Chaux-de-Fonds (Switzerland)	100%
Icade Sarl	Rotonde Auguste Colonna - BP 144, 42160 Andrezieux Boutheon (France)	100%
Imagelevel NV	Nieuwkerkenstraat 29, 9100 Nieuwkerken-Waas (Belgium)	100%
JPG Pharma NV	Ondernemersstraat 4, 2500 Lier (Belgium)	100%
Liengme SA	Boulevard de Eplatures 39, 2300 La Chaux-de-Fonds (Switzerland)	100%
Lamoral NV	Textielstraat 24, 8790 Waregem (Belgium)	100%
Médical Universal SAS	1 Rue Galilée, 69800 Saint Priest (France)	100%
Multident GmbH	Mellendorferstrasse 7-9, 30623 Hannover (Germany)	100%
Nolte GmbH	Schurfweg 29, 49477 Ibbenbüren (Germany)	100%
Novux Lab BV	Leeuweriklaan 2, 3705 GR Zeist (The Netherlands)	100%
Owandy Benelux Sprl	Chaussée Bara 68, 1420 Braine L'Alleud (Belgium)	100%
Owandy Iberia SLU	Centrobbc Barajas c/Jerez de los cabaleros 2, 28042 Madrid (Spain)	100%
Owandy lnc	192 Lexington Avenue Suite 1101, 10016 NY New York (United States)	100%
Owandy Radiologie Italia Srl	Via del Guado 37,20033 MI Desio (Italy)	100%
Owandy SAS	Allée kepler 4/5, 77420 Champssur Marne (France)	100%
Pharmaflore SA	Rue Botrieux 7, 7864 Lessines (Deux-Acren) (Belgium)	100%
Polichimica SA	Via Del Fonditore 4/4, 40138 Bologna (Italy)	100%
Rocam SA	Rue Jardinière 153, 2300 La Chaux-de-Fonds (Switzerland)	100%
Spruythillen BV	Tinbergenlaan 1, 3401 MT Ijsselstein (The Netherlands)	100%
Steunpunt Apotheek Mierlo-Hout BV	Steenovenweg 15, 5700 AJ Helmond (The Netherlands)	100%
Timm Health Care BV	Tinbergenlaan 1, 3401 MT Ijsselstein (The Netherlands)	100%
Twipe BV	Kralingseweg 207-211, 3062 CE Rotterdam (The Netherlands)	100%
Van Hopplynus Ophtalm SA	Rue Colonel Bourg 105, 1030 Bruxelles (Belgium)	100%
Zenith Pharmaceuticals Cyprus Ltd	Doma Building Arch Makarios III Avenue 227, 3105 Limassol (Cyprus)	100%

STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS' MEETING ON THE CONSOLIDATED ACCOUNTS OF THE COMPANY ARSEUS NV AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2010

As required by law and the company's articles of association, we report to you in the context of our appointment as the company's statutory auditor. This report includes our opinion on the consolidated accounts and the required additional disclosure.

Unqualified opinion on the consolidated accounts

We have audited the consolidated accounts of Arseus NV and its subsidiaries (the "Group") as of and for the year ended 31 December toto, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated accounts comprise the consolidated balance sheet as of 31 December 2010 and the consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the year then ended, as well as the summary of significant accounting policies and other explanatory rotes. The total of the consolidated balance sheet amounts to EUR (0,00) 573.592 and the consolidated statement of income Shows a result for the year, group share, of EUR (0,00) 22.357.

The company's board of directors is responsible for the preparation of the consolidated accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these consolidated accounts based on our audit. We conducted our audit in accordance with the legal requirements applicable in Belgium and with Belgien auditing standards, as issued by the "Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren". Those auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated accounts are free of material misstatement.

In accordance with the auditing standards referred to above, we have carried out procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts.

The selection of these procedures is a matter for our judgment, as is the assessment of the risk that the consolidated accounts contain material misstatements, whether due to fraud or error. In making those risk assessments, we have considered the Group's internal control relating to the preparation and fair presentation of the consolidated accounts, in orderto design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. We have also evaluated the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as the presentation of the consolidated accounts taken as a whole. Finally, we have obtained from the board of directors and Group officials the explanations and information necessary for our audit. We believe that the audit evidence we have obtained provides a reasonable basis for our opinion.

In our opinion, the consolidated accounts give a true and fair view of the Group's net worth and financial position as of 31 December 2010 and of its results and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium.

Additional remark

The company's board of directors is responsible for the preparation and content of the management report on the consolidated accounts.

Our responsibility is to include in our report the following additional remark, which does not have any effect on our opinion on the consolidated accounts:

•

The management report on the consolidated accounts deals with the information required by the law and is consistent with the consolidated accounts. However, we are not in a position to express an opinion on the description of the principal risks and uncertainties facing the companies included in the consolidation, the state of their affairs, their forecast development or the significant influence of certain events on their Future development. Nevertheless, we can confirm that the information provided is not in obvious contradiction with the information we have acquired in the context of our appointment.

Ghent, 13 April 2011

The statutory auditor

PwC Bedrijfsrevisoren cvba

Represented by

Peter Opsomer, Bedrijfsrevisor

Statutory financial statements

Condensed stand-alone income statement Arseus NV

	2010	2009
Operating income	2.793	2.185
Turnover
Other operating income	2.793	2.185
Operating charges	3.411	2.288
Goods for resale, raw materials and consumables
Sevices and other goods	3.266	2.152
Remuneration, social security and pensions	94	107
Depreciation and amortisation	29	28
Other operating charges	22	1
Operating result	-618	-103
Financial result	17.795	22.499
Profit from ordinary activities before taxes	17.177	12.396
Exceptional result
Profit for the financial year before taxes	17.177	12.396
Result taxes
Net profit for the financial year	17.177	12.396

Condensed stand-alone balance sheet Arseus NV

	2010	2009
Fixed assets	400.143	375.328
Formation expenses
Intangible assets	57	85
Property, plant and equipment
Financial assets	400.086	375.243
Current assets	114.131	107.273
Debtors due after one year	69.569	69.569
Inventories and orders in execution
Debtors due within one year	8.570	1.169
Investments	11.613	8.616
Cash at bank and in hand	24.334	27.904
Deferred charges and accrued income	45	15
Total assets	514.274	482.601
Capital and reserves	333.526	329.503
Capital	319.810	319.810
Share premiums
Legal reserves	2.434	1.575
Unavailable reserves	10.816	7.840
Available reserves	278	278
Profit carried forward	188
Creditors	180.748	153.098
Creditors due after one year	166.000	141.000
Creditors due within one year	14.564	11.954
Accrued charges and deferred income	184	144
Total liabilities	514.274	482.601

Appropriation of profits Arseus NV

	2010	2009
Profit to be appropriated	17.177	12.396
Profit for the year to be appropriated	17.177	12.396
Profit carried forward from the previous financial year
Transfers from capital and reserves		693
To the reserves		693
Transfers to capital and reserves	3.835	2.210
To statutory reserves	859	620
To other reserves	2.976	1.590
Result to be carried forward	188
Profit to be carried forward	188
Profit to be distributed as dividends	13.154	10.880
Dividend	13.154	10.880

Accounting policies

The accounting policies used for the stand-alone statutory financial statements of Arseus NV are in accordance with the KB of 31.01.2001 implementing the Belgian Companies Code.

Statutory financial statements of Arseus NV

As required by article 105, Belgian Companies Code, this annual report contains a condensed version of the statutory financial statements of Arseus NV. The annual report and the Statutory Auditor's report will be filed and will be available for inspection at the company's registered seat.

The Statutory Auditor expressed his unqualified opinion on the statutory financial statements of Arseus NV over financial year 2010.

Alphabetical terminology list

In addition to the terms as defined in IFRS, this annual report also includes other terms. These 'alternative performance indicators' are defined below. The IFRS terminology is in bold.

Operating cash flow:	EBITDA, "Earnings Before Interests, Taxes, Depreciations and Amortizations", Result of operating activities plus depreciations and amortisations.
Operating result:	Result of operating activities, EBIT ("Earnings Before Interests and Taxes")
Gross margin:	Net turnover less acquired trade goods, raw materials and auxiliary materials and adjusted for change in inventories and WIP, as a percentage of net turnover
EBIT:	"Earnings Before Interests and Taxes", Result of operating activities
EBITDA:	"Earnings Before Interests, Taxes, Depreciations and Amortizations", Result of operating activities plus depreciations and amortizations, operating cash flow
EBT:	"Earnings Before Taxes", Profit before taxes, Result of operating activities after net financing costs
Financial result:	Net financing costs, result of financing income and financing costs
Gearing ratio:	Net financial debt as percentage of total Equity
Net capex:	Net capital expenditure, Capital expenditure (investments) and produced assets less turnover of investment goods and investment goods taken out of service
Net financial debt:	The sum of current and non-current interest-bearing borrowings plus derivative financial instruments and less cash and cash equivalents
Net turnover:	Revenue
Non-recurring items:	One-off charges not related to ordinary operations
Net result:	Profit (loss) of the reporting period, consolidated result
REBIT:	"Recurring Earnings Before Interests and Taxes", Result of operating activities adjusted for all non-recurring items
REBITDA:	"Recurring Earnings Before Interests, Taxes, Depreciations and Amortizations", Result of operating activities plus depreciations and amortizations and adjusted for all non-recurring items
Recurring net result:	Profit (loss) of the reporting period, adjusted for non-recurring items
Recurring net operating cash flow:	Profit (loss) of the reporting period plus depreciations and amortisations and adjusted for all non-recurring items
Recurring operating cash flow:	Profit (loss) from operating activities plus depreciations and amortisations and adjusted for all non-recurring items
Gearing ratio	Net financial debt as percentage of total Equity
Working capital:	Inventories plus Trade receivables less Trade payables